4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

VOL. 17, AUGUST 31, 1966 1077

Phil. Blooming Mills Co., Inc., et al. vs. Social Security
System

No. L­21223. August 31, 1966.

PHILIPPINE BLOOMING MILLS Co., INC. (As

Employer), and FRANCISCO TONG (As Assistant General
Manager) and Attorney­in­Fact of SUSUMU SONODA,
SENJI TANAKA, TAKASHIKO KUMAMOTO, HITOSHI
NAKAMURA, TETSUO KODU, (Employees), petitioners
and appellants, vs. SOCIAL SECURITY SYSTEM,
respondent and appellee.

Constitutional Law; Social Security System; Membership

therein is not the result of a contractual agreement but a legal
imposition.—Membership in the Social Security System is not the
result of a bilateral, consensual agreement where the rights and
obligations of the parties are defined by and subject to their will.
Republic Act 1161 requires compulsory coverage of employers and
employees under the system. It is actually a legal imposition on
said employers and employees, designed to provide security to the
working men. Membership in the Social Security System is,
therefore, in compliance with a lawful exercise of the police power
of the State, to which the principle of nonimpairment of the
obligation of contract is not a proper defense.
Same; Statutes; Effectivity of laws; Amended rules take effect
upon approval by the President.—Under Article 2 of the New Civil
Code, the date of publication of laws in the Official Gazette is
material for the purpose of determining their effectivity, only if
the statutes themselves do not so provide. When the original
Rules and Regulations of the Social Security System specifically
provide that any amendment thereto subsequently adopted by the
Commission, shall take effect on the date of its approval by the
President, the delayed publication of the amended rules in the
Official Gazette did not affect the date of their effectivity, which is
January 14, 1958, when they were approved by the President.

PETITION for review by certiorari of a resolution of the

Social Security Commission.

http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 1/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

The facts are stated in the opinion of the Court.

     Demetrio B. Salem for petitioners and appellants.
          Solicitor General Edilberto Barot and Solicitor
Camilo D. Quiason for respondent and appellee.

BARRERA, J.:

The facts of this case are not disputed:

The Philippine Blooming Mills Co., Inc., a domestic cor­

1078

1078 SUPREME COURT REPORTS ANNOTATED

Phil. Blooming Mills Co., Inc., et al. vs. Social Security
System

poration, since the start of its operations in 1957, has been

employing Japanese technicians under a pre­arranged
contract of employment, the minimum period of which
employment is 6 months and the maximum is 24 months.
From April 28, 1957, to October 26, 1958, the
corporation had in its employ 6 Japanese technicians. In
connection with the employment of these aliens, it sent an
inquiry to the Social Security System (SSS) whether these
employees are subject to compulsory coverage under the
System, which inquiry was answered by the First Deputy
Administrator of the SSS, under date of August 29, 1957,
as follows:

“SIR:

With reference to your letter of August 24, 1957, hereunder are

our answers to your queries:

“Aliens employed in the Philippines:

“Aliens who are employed in the Philippines shall also be

compulsorily covered. But aliens who are employed temporarily
shall, upon their departure from the Philippines, be entitled. to a
rebate of a proportionate amount of their contributions; their
employers shall be entitled to the same proportionate rebate of
their contributions in behalf of said aliens employed by them.
(Rule I, Sec. 3[d], Rules and Regulations.)"

Starting September, 1957, and until the aforementioned

Japanese employees left the Philippines on October 26,
1958, the corresponding premium contributions of the
employer and the employees on the latter’s memberships in
the SSS were as follows:

http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 2/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

      Amount of Premiums
  SS . Monthly Contributed
Name Number Salary 2.5% 3.5% Total
(Employee) (Employer)
Susumu 03– P520.00 P 175.00 P 245.00 P 420.00
Sonoda 075177
Senji 03– 520.00 175.00 245.00 420.00
Tanaka 075178
Kahei 03– 500.00 175.00 245.00 420.00
Tanaka 075179
Takashiko 03– 500.00 175.00 245.00 420.00
Kumamoto 075180
Hitoshi 03– 500.00 175.00 245.00 420.00
Nakamura 075181
Tetsuo 03– 500.00 175.00 245.00 420.00
Kudo 075182
  T o t a l— P1,050.00 P1,470.00 P2,520.00

1079

VOL. 17, AUGUST 31, 1966 1079

Phil. Blooming Mills Co., Inc., et al. vs. Social Security
System

On October 7, 1958, the Assistant General Manager of the

corporation, on its behalf and as attorney­in­fact of the
Japanese technicians, filed a claim with the SSS for the
refund of the premiums paid to the System, on the ground
of termination of the members’ employment. As this claim
was denied, they filed a petition with the Social Security
Commission for the return or refund of the premiums, in
the total sum of P2,520.00, paid by the employer
corporation and the 6 Japanese employees, plus attorneys’
fees. This claim was controverted by the SSS, alleging that
Rule IX of the Rules and Regulations of the System, as
amended, requires membership in the System for at least 2
years before a separated or resigned employee may be
allowed a return of his personal contributions. Under the
same rule, the employer is not also entitled to a refund of
the premium­contributions it had paid.
After hearing, the Commission denied the petition for
the reason that, although under the original provisions of
Section 3(d) of Rule I of the Rules and Regulations of the
SSS, alien­employees (who are employed temporarily) and

http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 3/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

their employers are entitled to a rebate of a proportionate

amount of their respective contributions upon the
employees’ departure from the Philippines, said rule was
amended by eliminating that portion granting a return of
the premiumcontributions. This amendment became
effective on January 14, 1958, or before the employment of
the subjectaliens terminated. The rights of covered
employees who are separated from employment, under the
present Rules, are covered by Rule IX which allows a
return of the premiums only if they have been members for
at least 2 years.
It is this resolution of the Commission that is the subject
of the present appeal, appellants contending that the
amendment of the Rules and Regulations of the SSS,
insofar as it eliminates the provision on the return of
premium­contributions, originally embodied in Section 3(d)
of Rule I, constituted an impairment of obligations of
contract It is claimed, in effect, that when
appellantsemployees became members in September, 1957,
and paid
1080

1080 SUPREME COURT REPORTS ANNOTATED

Phil. Blooming Mills Co., Inc., et al. vs. Social Security
System
1
the corresponding premiums to the System, it is subject to
the condition that upon their departure from the
Philippines, these employees, as well as their employer, are
entitled to a rebate of a proportionate amount of their
respective contributions.
The contention cannot be sustained. Appellants’
argument is based on the theory that the employees’
membership in the System established contractual
relationship between the members and the System, in the
sense contemplated and protected by the constitutional
prohibition against its impairment by law. But,
membership in this institution is not the result of a
bilateral, consensual agreement where the rights and
obligations of the parties are defined by and subject to their
will. Republic Act 1161 requires compulsory coverage of
employers and employees under the System. It is actually a
legal imposition, on said employers and employees,
designed to provide social security to the workingmen.
Membership in the SSS is, therefore, in compliance with a
lawful exercise of the police power of the State, to which

http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 4/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

the principle of nonimpairment of the obligation of contract

is not a proper defense.
As pointed out by the Solicitor General, the issue that
should be determined in this case is whether, in
implementing the SSS law and denying appellants’ claim
for refund of their premium­contributions, due process was
observed.
The Rules and Regulations promulgated by the SSS,
pursuant to the rule­making authority granted in Section
4(a) of Republic Act 1161, was duly approved by the
President on July 18, 1957, and published
2
in the Official
Gazette on September 15, 1957. These rules and
regulations, among others, provide:

“I

“DETERMINATION OF COMPULSORY COVERAGE

“3. The determination of whether an employer or an employee

shall be compulsorily covered shall be vested in the Com­

________________

1 Appellants must be ref erring to their obligation to pay the premium­

contributions and retain membership in the System.
2 Vol. 58, No. 17, p. 6588.

1081

VOL. 17, AUGUST 31, 1966 1081

Phil. Blooming Mills Co., Inc., et al. vs. Social Security System

mission. The following general principles shall guide the

Commission in deciding each case:

x      x      x

"(d) Aliens who are employed in the Philippines shall also be

compulsorily covered. But aliens who are employed temporarily
and whose visas are only for fixed terms shall, upon their
departure from the Philippines, be entitled to a rebate of a
proportionate amount of their contributions; their employers shall
be entitled to the same proportionate rebate of their contributions
in behalf of said aliens employed by them.”

“XI

“AMENDMENTS AND EFFECTIVITY

“1. The Commission may, by appropriate resolution, amend,

repeal, revise and/or modify all or any part or parts of these Rules
http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 5/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

and Regulations, as well as adopt any additional rule or rules,

whenever the need therefor should arise. Any amendment and/or
additional rule, however, shall not take effect until and after the
corresponding resolution of the Commission has been submitted
to and approved by the President of the Philippines.
“2. These Rules and Regulations, any amendment thereof, or
any additional rule or rules subsequently adopted by the
Commission, shall take effect on the date they are approved by
the President of the Philippines.”

Rule I, Section 3(d) and Rule IX, however, were later

amended, which amendment was approved by the
President on January 14, 1958, to read as follows:

"(d) Aliens who are employed in the Philippines shall also be

compulsorily covered” (Sec. 3, Rule I).

“EFFECT OF SEPARATION FROM EMPLOYMENT

“When an employee under compulsory coverage is separated

from employment, his employer’s contribution on his account shall
cease at the end of the month of separation; but such employee
may continue his membership in the System and receive the benef
its of the Act, as amended, in accordance with these rules. If he
continues paying the 6 per cent monthly premiums representing
his as well as the employer’s contribution, based on his monthly
salary at the time of his separation; but if at the time of his
separation the covered employee has been a member of the
System for at least two years, he shall have the option to choose
any one of the following adjustments of his membership in the
System:
“1. A refund of an amount equivalent to his total contributions
of two and one­half per centum plus interests at the rate of three
per centum per annum, compounded annually;

x      x      x.” (Rule IX)

1082

1082 SUPREME COURT REPORTS ANNOTATED

Phil. Blooming Mills Co., Inc., et al. vs. Social Security
System

These amended Rules were published 3

in the November 10,
1958 issue of the Official Gazette.
It is not here disputed that the Rules and Regulations of
the SSS, having been promulgated in implementation
4
of a
law, have the force and effect of a statute; that the
amendment thereto, although approved by the President
http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 6/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

on January 14, 1958, was published in the Official Gazette

in November, 1958, or after the employment of the
Japanese technicians had ceased and the corresponding
claim for the refund of the premium­contributions was filed
with the System, The question pertinent to this case now is
whether or not appellants are bound by the amended Rules
requiring membership for two years before a refund of the
premium­contributions may be allowed.
These rules and regulations were promulgated to
provide guidelines to be observed in the enforcement of the
law. As a matter of fact, Section 3 of Rule I is merely an
enumeration of the “general principles to (shall) guide the
Commission” in the determination of the extent or scope of
the compulsory coverage of the law. One of these guiding
principles is paragraph (d) relied upon by appellants, on
the coverage of temporarily­employed aliens. It is not here
pretended, that the amendment of this Section 3(d) of Rule
I, as to eliminate the provision granting to these aliens the
right to a refund of part of their premiumcontributions
upon their departure from the Philippines, is not in
implementation of the law or beyond the authority of the
Commission to do.
It may be argued, however, that while the amendment
to the Rules may have been lawfully made by the
Commission and duly approved by the President on
January 14, 1958, such amendment was only published in
the November 1958 issue of the Official Gazette, and after
appellants’ employment had already ceased. Suffice it to5
say, in this regard, that under Article 2 of the Civil Code,
the date of

________________

3 Vol. 54, No. 1, p. 7388.

4 U.S. v. Tupasi Molina, 29 Phil. 119, cited in People v. Que Po Lay,
G.R. No. L­6791, March 29, 1954.
5”ART. 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is
otherwise provided. x x x.”

1083

VOL. 17, AUGUST 31, 1966 1083

Papa vs. Banaag

publication of laws in the Official Gazette is material for

the purpose of determining their effectivity, only if the
statutes themselves do not so provide.
http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 7/8
4/16/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 017

In the present case, the original Rules and Regulations

of the SSS specifically provide that any amendment thereto
subsequently adopted by the Commission, shall take effect
on the date of its approval by the President. Consequently,
the delayed publication of the amended rules in the Official
Gazette did not affect the date of their effectivity, which is
January 14, 1958, when they were approved by the
President. It follows that when the Japanese technicians
were separated from employment in October, 1958, the rule
governing refund of premiums is Rule IX of the amended
Rules and Regulations, which requires membership for 2
years before such refund of premiums may be allowed,
Wherefore, finding no error in the resolution of the
Commission appealed from, the same is hereby affirmed,
with costs against the appellants. So ordered.

Chief Justice Concepcion and Justices Dizon,

Makalintal, J.P. Bengzon, Zaldivar, Sanchez and Castro,
concur. Mr. Justice J.B.L. Reyes reserves his vote. Mr.
Justice Regala. on leave. did not take part.

Resolution affirmed.

_____________

© Copyright 2018 Central Book Supply, Inc. All rights reserved.

http://www.central.com.ph/sfsreader/session/00000162ce8bd6bc7190a697003600fb002c009e/t/?o=False 8/8